What Impacts Your Car Insurance Price

What Impacts Your Car Insurance Price?

What impacts your car insurance price?

What impacts your car insurance price? How is car insurance calculated? As a driver, understanding how your car insurance companies set their prices can be very difficult. And the reason is that Auto insurance companies make use of different factors to determine how much your car insurance price will be.

However, some of these factors include your age, credit score, gender, driving records, vehicle type, claims history, and Zip code depending on your state car insurance regulations. Although, not all insurers weigh price factors the same way, knowing the factors that impact the price of car insurance can help you when comparing different car insurance quotes or when reviewing policy renewals.

What Impacts Your Car Insurance Price

Also, you need to know that the biggest factors that affect your auto insurance price are the car’s make and model, age, and state coverage requirements. The more valuable your car is and the more coverage you are required to purchase in your state, the more you will have to pay for your auto insurance. If you are wondering about what factors impact your car insurance price or how can you decrease your insurance rates, you are in the right place. Read on to know what impacts your car insurance price or premium.

7 Factors that impact your car insurance price

Just as mentioned above, insurance companies make use of different factors to determine how much your car insurance premium will be.  An auto insurance quote you get you a company can be cheaper at a different company for the same coverage. Nevertheless, in this section of the article, let’s take a look at some of what makes car insurance expensive or affect the price positively.

Below are 7 factors affecting insurance premiums, take a look;

State Requirements

State of residence is a very big factor that affects auto insurance prices the most. Most prices for state minimum coverage vary by up to 318 percent. Every state has its laws about car insurance, with different minimums and various categories of coverage required. In other words, the more coverage you are required to buy in your state, the more expensive your policy will be.

Driving Record

Your driving record includes the history of your at-fault accidents and traffic violations. It is also one of the biggest factors that impact your car insurance price. Auto insurance companies look at your driving record for the past 3 to 5 years depending on your state. If you have received traffic tickets or caused an accident, you will be required to pay more for car insurance.

If you have a long history of at-fault accidents, DUI/DWI convictions, or traffic violations, you may have a very hard time finding car insurance. Also, If auto insurers deny you coverage, you may end up with nonstandard auto insurance which is very risky for drivers. Or you may have to purchase insurance from your state-assigned risk pool.  

However, the good news is that, regardless of your driving history, you can work to improve it. Avoiding transgressions and practicing good driving habits will pay off. It may take a long time, but the longer you drive without accidents or any incidents the better car insurance rates you will get.

The type of car

The type of car also plays an important role in setting your car insurance premium.  Some vehicles are cheaper and less expensive to insure than other vehicles. For instant, a sedan is 3% more expensive to insure than a truck on average. Insurance companies like to insure safe cars that are likely to lead to very expensive claims. So, a vehicle with a high safety rating can be costly. Also, cars that are likely to get stolen are more expensive to an insurer.

Zip code

Your Zipcode may affect your car insurance premium. People who live in metropolitan areas tend to pay higher than those who live in suburban areas due to higher rates of accidents, theft, and vandalism. Other location-relation factors include car repair cost, frequency of car accident lawsuits, and cost of medical care


Based on age, Car insurance rates can vary up to 367%. Young drivers tend to pay more for auto insurance because they are considered inexperienced and pose a higher risk for accidents. After the age of 25, drivers insurance rates will start to decrease.

Also, drivers that are above the age of 65 are charged more. Not only are senior drivers more likely to get in a car accident than young people, but they are also likely to be injured in a collision.

Type of Coverage

The type of coverage you go for may affect the price of your auto insurance. The more coverage you buy, the more expensive your premiums will be. that is why is it advisable to go for the coverage that you need. You don’t need to buy coverage that will be more than your budget.

Other auto insurance pricing factors

Auto insurance companies often look at different nondriving factors when setting their prices. These nondriving factors include

  • Gender
  • Occupation
  • Homeownership
  • Marital status
  • Education

Knowing these above factors can help you save more money on car insurance. Make sure you shop around and compare insurance quotes to find good rates among several car insurance companies.

4 Important Factors That Can Cause Your Insurance Rate to go Down

Similar to the fact that the above factors can impact the price of your car insurance rate. There are, however, ways that you can follow to decrease or cut your auto insurance costs. Here are the following:

Shop around

One of the best ways you can cut your auto insurance costs is by shopping across several insurance companies to find good rates by comparing the car insurance quote provided.

Lower your deductible

Another factor includes lowering your deductible which helps save more money. For someone that has low accident history, it’s not bad if you choose a higher deductible. But you need to be sure that you can afford to pay your deductible amount from your pocket.

Take a defensive driving course

Taking a defensive driving course appears one of the best approaches to reducing your car insurance rate. There are two ways benefits to a state-approved defensive driving course. This includes a reduction of points accumulated on your driving record for traffic citations. Secondly, access to more discounts especially for drivers age 55 and older.

Lastly, Discounts, your qualification for car insurance discounts depends on certain factors such as safe driver discounts, good student discounts, car safety feature discounts, and many more.

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